Employers, human resource departments, and business consultants of all sizes are trying to wrap their heads around the Affordable Care Act (ACA) and what it means for their bottom line. One of the key questions employers with more than 50 employees should begin asking themselves is, “should I pay or play?”

To summarize this in the most basic terms, the ACA includes an employer penalty, which an employer with greater than 50 full-time equivalent employees (FTEs) is required to pay, if they choose not to offer “qualified” and “affordable” health insurance to employees. If an employer does not “play” by meeting the minimum requirements of offering “qualified” and “affordable” coverage employer penalty, then he or she will have to “pay” a penalty.

According to the health reform bill,, “applicable large employers” must offer “essential health benefits” that is “affordable” to employees. In order to determine whether it will be best for your business to pay or play, you’ll first want to have a good understanding of these three concepts:

Applicable Large Employers – If a company employed an average of 50 or more full-time equivalent employees during the previous calendar year, it is considered an applicable large employer for the current year.

Minimum Essential Health Benefits (EHB) – These are a set of health care service categories that must be covered by certain plans starting in 2014. These will vary by state, and will be finalized by each state’s Department of Insurance.

To determine whether an employer should pay or play, the employer should set up cost-benefit analysis comparing the cost of paying the tax penalty and offering a health reimbursement arrangement (HRA) to the cost of playing by the rules of the plan and providing affordable, Essential Health Benefits.

Full-time Equivalent of Part-time Employees = Part-time Hours Worked / 120. Generally, a full-time employee is an employee who is employed on average at least 30 hours of service per week in a given month.

When conducting a cost-benefit analysis, the key tax issues the employer should consider are:

Employer Tax Penalty for Not Offering "Qualified" Group Health

Not applicable for employers with less than 50 FTEs

$2,000 penalty per full-time employee (minus 30 employee credit)****

Employer Tax Penalty for Offering "Qualified" Health That is Not "Affordable"

Comments

Tanzie Yvette Haines

Howwill it effect taxes do population have to pay higer taxes. Isthis insurace for marry people or single. Why do marry peeople get more on taxes and why do population of people have to have a qualify child to earn more money on taxes.People dont think about people who kids are all grown have own life.People who dont have childrens not getting a fare deal in today's society.Remember its parents born cant never born a child and alot people dont like getting invovle with other people childrens and parenthood is not for every one lives.

Tanzie Yvette haines

My ideas counts to Iam a American black female living in Ocala, Florida.

Disclaimer: The information provided on this website is general in nature and does not apply to any specific U.S. state except where noted. Health insurance regulations differ in each state. See a licensed agent for detailed information on your state. Zane Benefits, Inc. does not sell health insurance.